Correlation Between Iron Road and 1ST SUMMIT

Can any of the company-specific risk be diversified away by investing in both Iron Road and 1ST SUMMIT at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Iron Road and 1ST SUMMIT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iron Road Limited and 1ST SUMMIT BANCORP, you can compare the effects of market volatilities on Iron Road and 1ST SUMMIT and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Iron Road with a short position of 1ST SUMMIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and 1ST SUMMIT.

Diversification Opportunities for Iron Road and 1ST SUMMIT

-0.61

Correlation Coefficient

Iron Road  1ST SUMMIT

Excellent diversification

The 3 months correlation between Iron and 1ST is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road Limited and 1ST SUMMIT BANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1ST SUMMIT BANCORP and Iron Road is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Iron Road Limited are associated (or correlated) with 1ST SUMMIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1ST SUMMIT BANCORP has no effect on the direction of Iron Road i.e., Iron Road and 1ST SUMMIT go up and down completely randomly.

Pair Corralation between Iron Road and 1ST SUMMIT

Assuming the 90 days horizon Iron Road Limited is expected to under-perform the 1ST SUMMIT. In addition to that, Iron Road is 54.17 times more volatile than 1ST SUMMIT BANCORP. It trades about -0.13 of its total potential returns per unit of risk. 1ST SUMMIT BANCORP is currently generating about 0.13 per unit of volatility. If you would invest  7,457  in 1ST SUMMIT BANCORP on February 18, 2024 and sell it today you would earn a total of  43.00  from holding 1ST SUMMIT BANCORP or generate 0.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Iron Road Limited  vs.  1ST SUMMIT BANCORP

Iron Road Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Road Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

1ST SUMMIT BANCORP

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 1ST SUMMIT BANCORP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, 1ST SUMMIT is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Iron Road and 1ST SUMMIT

The main advantage of trading using opposite Iron Road and 1ST SUMMIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, 1ST SUMMIT can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in 1ST SUMMIT will offset losses from the drop in 1ST SUMMIT's long position.

The idea behind Iron Road Limited and 1ST SUMMIT BANCORP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.